Defense primes are ripping higher Thursday morning even as the broader market sags. Lockheed Martin (NYSE:LMT | LMT Price Prediction) stock is up 10% to $567.71, while RTX (NYSE:RTX) shares are up 7% to $208.48. The S&P 500 is down 1.16%, making the divergence a standout story of today’s session.
The move follows beat-and-raise Q2 2026 results from both of these defense contractors, released before the open. Investors are treating the results as confirmation that global rearmament is still translating into record backlogs and rising cash flow.
Beat-and-Raise Quarters With Record Backlogs
Lockheed Martin posted adjusted EPS of $7.94 on revenue of $20.1 billion, up 11% year over year, versus roughly $7.23 and $19.37 billion expected. The company booked $65 billion of new Q2 orders, including a multi-year $35 billion THAAD interceptor agreement with the Missile Defense Agency, taking backlog to a record $230 billion.
Management raised Lockheed Martin’s full-year 2026 guidance across the board, lifting EPS to $29.95 to $30.65, revenue to $79.75 billion to $81.75 billion, and free cash flow to $7 billion to $7.2 billion. Lockheed Martin CEO Jim Taiclet, in the company’s 8-K filing, cited a “higher trajectory for our business.” One nuance: the year-over-year profit swing benefits from easy comps, since the prior-year period absorbed about $1.6 billion in losses tied to a classified program and helicopter contracts.
Meanwhile, RTX’s report was even more striking on the top line. The company delivered adjusted EPS of $1.89 on revenue of $24.7 billion, up 16% organically, its fifth consecutive beat. The company’s backlog hit a record $289 billion ($170 billion commercial aerospace, $119 billion defense), with Q2 free cash flow of $2.9 billion.
Furthermore, RTX raised its full-year outlook to EPS of $7.10 to $7.25, revenue of $95 billion to $96 billion, and organic sales growth of 8% to 9% from 5% to 6%. CEO Chris Calio stated that “demand remains robust, and our backlog is up 22 percent year over year.” Patriot, Standard Missile, and AMRAAM volume drove the Raytheon segment, while Pratt & Whitney’s commercial aftermarket climbed 25%.
Sector Strength Lifts Boeing and the Defense ETF
The rally is spilling across aerospace and defense. Boeing (NYSE:BA) stock is unchanged at $209, which might not sound impressive but bear in mind that the stock market is down overall. Boeing didn’t report today, so the move reads as sympathy strength on broader aerospace sentiment rather than a company-specific catalyst.
The iShares U.S. Aerospace & Defense ETF (NYSEARCA:ITA) is also trading higher with the group, giving investors a diversified way to play the theme. The fund holds Lockheed Martin, RTX, and Boeing, with RTX among its top weights. Investors should note the ETF’s single-sector concentration in a handful of large-cap names, though it’s not leveraged.
The rally comes on top of a strong year. Lockheed Martin stock has climbed 37% over the past 12 months, and RTX shares are up 35%. Both have run hard, and while the bull case rests on sustained defense budgets, program execution, and orderly conversion of backlog into cash, government budget dependence and fixed-price program risk remain real overhangs.
What to Watch
Lockheed Martin’s earnings call took place at 8:30 a.m. ET, and RTX’s kicked off at 7:30 a.m. ET, so any color on munitions capacity and F-35 delivery cadence should filter through analyst notes by midday. Investors can watch for whether LMT stock and RTX shares hold their morning gains into the close and whether sell-side price targets follow the raised guidance higher.
Position sizing should stay measured given how much these names have already appreciated. With backlogs at records and guidance raised across both companies, the setup favors the bulls, but the easy money on the initial earnings pop may already be priced in.
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